Indian Accounting


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11.29.2012

INTRODUCTION & COMPARITIVE ANALYSIS BETWEEN OLD SCHEDULE VI AND REVISED SCHEDULE VI




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INTRODUCTION TO

REVISED SCHEDULE VI

Every company registered under the Act shall prepare its Balance Sheet, Statement of Profit and Loss and notes thereto in accordance with the manner prescribed in Schedule VI to the Companies Act, 1956. To harmonise the disclosure requirements with the Accounting Standards and to converge with the new reforms, the Ministry of Corporate Affairs vide Notification No. S.O. 447(E), dated 28th February 2011 replaced the existing Schedule VI of the Companies Act, 1956 with the revised one.

Government vide Notification No. F.N. 2/6/2008 – C.L-V dated 30th March 2011 made the revised Schedule VI applicable to all companies for the financial year commencing from 01st April 2011. The requirements of the Revised Schedule VI however, do not apply to companies as referred to in the proviso to Section 211 (1) and Section 211 (2) of the Act, i.e., any insurance or banking company, or any company engaged in the generation or supply of electricity or to any other class of company for which a form of Balance Sheet and Profit and Loss account has been specified in or under any other Act governing such class of company.

Key Features of Revised Schedule VI –Balance Sheet

  The revised schedule contains General Instructions, Part I – Form of Balance Sheet; General Instructions for Preparation of Balance Sheet, Part II – Form of Statement of Profit and Loss; General Instructions for Preparation of Statement of Profit and Loss.

  The Revised Schedule VI has eliminated the concept of ‘schedule’ and such information is now to be furnished in the notes to accounts.

  The revised schedule gives prominence to Accounting Standards (AS) i.e. in case of any conflict between the AS and the Schedule, AS shall prevail.

  The revised schedule prescribes a vertical format for presentation of balance sheet therefore, no option to prepare the financial statement in horizontal format. It ensures application of uniform format.

  All Assets and liabilities classified into current and non-current and presented separately on the face of the Balance Sheet.

    Number of shares held by each shareholder holding more than 5% shares now needs to be disclosed.

  Details pertaining to aggregate number and class of shares allotted for consideration other than cash, bonus shares and shares bought back will need to be disclosed only for a period of five years immediately preceding the Balance Sheet date.
  Any debit balance in the Statement of Profit and Loss will be disclosed under the head “Reserves and surplus.” Earlier, any debit balance in Profit and Loss Account carried forward after deduction from uncommitted reserves was required to be shown as the last item on the asset side of the Balance Sheet.
  Specific disclosures are prescribed for Share Application money. The application money not exceeding the capital offered for issuance and to the extent not refundable will be shown separately on the face of the Balance Sheet.   The   amount in    excess   of     subscription    or if     the
         requirements of minimum subscription are not met will be shown under “Other current liabilities.”


 The term “sundry debtors” has been replaced with the term “trade receivables.” ‘Trade receivables’ are defined as dues arising only from goods sold or services rendered in the normal course of business. Hence, amounts due on account of other contractual obligations can no longer be included in the trade receivables.

 The Old Schedule VI required separate presentation of debtors outstanding for a period exceeding six months based on date on which the bill/invoice was raised whereas, the Revised Schedule VI requires separate disclosure of “trade receivables outstanding for a period exceeding six months from the date the bill/invoice is due for payment.”

  “Capital advances” are specifically required to be presented separately under the head “Loans & advances” rather than including elsewhere.

  Tangible assets under lease are required to be separately specified under each class of asset. In the absence of any further clarification, the term “under lease” should be taken to mean assets given on operating lease in the case of lessor and assets held under finance lease in the case of lessee.

  In the Old Schedule VI, details of only capital commitments were required to be disclosed. Under the Revised Schedule VI, other commitments also need to be disclosed.

Key Features of Revised Schedule VI – Statement of Profit and Loss

      The name has been changed to “Statement of Profit and Loss” as against ‘Profit and Loss Account’ as contained in the Old Schedule VI.

      Unlike the Old Schedule VI, the Revised Schedule VI lays down a format for the presentation

of Statement of Profit and Loss. This format of Statement of Profit and Loss does not mention any appropriation item on its face. Further, the Revised Schedule VI format prescribes such ‘below the line’ adjustments to be presented under “Reserves and Surplus” in the Balance Sheet.

      As per revised schedule VI, any item of income or expense which exceeds one per cent of the revenue from operations or Rs.100,000 (earlier 1 % of total revenue or Rs.5,000), whichever is higher, needs to be disclosed separately.
      In respect of companies other than finance companies, revenue from operations need to be disclosed separately as revenue from (a) sale of products, (b) sale of services and (c) other operating revenues.
      Net exchange gain/loss on foreign currency borrowings to the extent considered as an adjustment to interest cost needs to be disclosed separately as finance cost.

      Break-up in terms of quantitative disclosures for significant items of Statement of Profit and Loss, such as raw material consumption, stocks, purchases and sales have been simplified and replaced with the disclosure of “broad heads” only. The broad heads need to be decided based on materiality and presentation of true and fair view of the financial statements.


                                                                                  

COMPARITIVE ANALYSIS BETWEEN OLD SCHEDULE VI

AND REVISED SCHEDULE VI

PARTICULARS
OLD SCHEDULE VI



REVISED SCHEDULE VI





Parts

Part  I  (Balance  Sheet),  Part  II
Only two parts- Part I(Balance Sheet)


(Profit and Loss Account), Part III
and  Part  II  (Statement  of  Profit  and


(Interpretation)
and
Part
IV
Loss)



(Balance
sheet
Abstract
of
Part  III  (Interpretation)  and  Part  IV


company’s
general

business
(Balance sheet Abstract of company’s


profile)





general business profile) omitted.
Format of Balance
Horizontal
and
Vertical
formats
Only vertical format is prescribed.
Sheet

are prescribed.






Rounding
off
(a)  Turnover of less than Rs. 100
(a)Turnover of less than Rs. 100 Crs -
(R/off)  of
Figures
Crs    -    R/off    to    the    nearest
R/off    to    the    nearest    Hundreds,
appearing
in
Hundreds,
thousands
or
decimal
thousands,    lakhs    or    millions    or
financial statement
thereof





decimal
thereof


(b)  Turnover  of  Rs.  100  Crs  or
(b)Turnover of Rs. 100 Crs or more -


more but less than Rs. 500 Crs -
R/off to the nearest lakhs, millions or


R/off   to   the   nearest   Hundreds,
crores, or decimal thereof



thousands,  lakhs  or  millions  or




decimal



thereof




(c)Turnover  of  Rs.  500  Crs  or




more   -   R/off   to   the   nearest




Hundreds,
thousands,
lakhs,




millions   or   crores,   or   decimal




thereof







Net Working
Current  assets  &  Liabilities  are
Assets    &    Liabilities    are    to    be
Capital

shown  together  under  application
bifurcated into current & Non-current


of funds. The net working capital
and to be shown separately. Hence, net


appears on balance sheet.


working capital will not be appearing








on Balance sheet.




Fixed Assets
There was no bifurcation required
Fixed  assets  to  be  shown  under  non-


into tangible & intangible assets.
current   assets   and   it   has   to   be








bifurcated  into  Tangible  &  intangible








assets.

















Borrowings
Short     term     &     long     term
Long  term  borrowings  to  be  shown

borrowings
are
grouped  together
under non-current liabilities and short

under  the  head  Loan  funds  sub-
term  borrowings  to  be  shown  under

head Secured / Unsecured

current
liabilities
with
separate







disclosure   of   secured   /   unsecured







loans.











Period   and   amount   of   continuing







default as on the balance sheet date in







repayment of loans and interest to be







separately specified










Finance lease
Finance
lease

obligations
are
Finance  lease  obligations  are  to  be
obligation
included in current liabilities

grouped  under  the  head  non-current







liabilities







Deposits
Lease deposits are part of loans &
Lease deposits to be disclosed as long

advances




term loans & advances under the head







non-current assets



Investments
Both    current    &    non-current
Current  and  non-current  investments

investments to be disclosed under
are  to  be  disclosed  separately  under

the head investments

current   assets  &  non-current   assets







respectively.






Loans & Advances
Loans  &  Advance  are  disclosed
Loans & Advances to be broken up in

along with current assets

long  term  &  short  term  and  to  be







disclosed under non-current & current







assets respectively.






Deferred Tax
Deferred Tax assets / liabilities to
Deferred  Tax  assets /  liabilities to be
Assets / Liabilities
be disclosed separately

disclosed  under  non-current  assets  /







liabilities as the case may be.


Cash & Bank
Bank  balance  to  be  bifurcated  in
Bank balances in relation to earmarked
Balances
scheduled banks & others

balances,    held    as    margin    money







against
borrowings,
deposits
with







more than 12 months maturity, each of







these to be shown separately.


Profit & Loss
P&L  debit  balance  to  be  shown
Debit   balance   of   Profit   and   Loss
(Dr Balance)
under
the
head
Miscellaneous
Account   to   be   shown   as   negative

expenditure & losses.

figure    under    the    head    Surplus.







Therefore,  reserve  &  surplus  balance







can be negative.



Sundry Creditors
Creditors  to  be  broken  up  in  to
It  is  named  as  Trade  payables  and

micro & small suppliers and other
there is no mention of micro & small

creditors.




enterprise disclosure.
















                      

Other current
No  specific  mention  for  separate
Current maturities of long term debt to
liabilities
disclosure of Current maturities of
be   disclosed   under   other   current

long term debt.
liabilities.

No  specific  mention  for  separate
Current   maturities   of   finance   lease

disclosure of Current maturities of
obligation to be disclosed.

finance lease obligation

Separate line item
any  item  under  which   expense
any  item  of  income  /  expense  which
Disclosure criteria
exceeds  one  per  cent  of  the total
exceeds  one  per  cent  of  the  revenue

revenue  of  the  company  or  Rs.
from   operations   or   Rs.   1,00,000,

5,000  whichever  is  higher;  shall
whichever  is  higher;  to  be  disclosed

be disclosed separately
separately
Expense
Function wise & nature wise
Expenses  in  Statement  of  Profit  and
classification

Loss to be classified based on nature


of expenses
Finance Cost
Finance  cost  to  be  classified  in
Finance  cost  shall  be   classified   as

fixed loans & other loans
interest expense, other borrowing costs


&  Gain  /  Loss  on  foreign  currency


transaction & translation.








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